Ending Best G-7 Economy’s Government Is Canada Anti-Harper Goal

March 21 (Bloomberg) -- Canadian Prime Minister Stephen
Harper oversees the fastest growing economy with the lowest
deficits among Group of Seven nations, the first to recoup all
jobs lost in the recession. Foreign investors rewarded the
government with record purchases of Canadian bonds in 2010 and
with the G-7’s best performing currency over the past two years.

Opposition lawmakers may try to reward Harper by kicking
him out of office.

Harper, 51, faces several Parliamentary votes this week
that could bring down his Conservative Party government about
halfway through its current mandate over a series of incidents
the main opposition Liberal Party calls an abuse of power,
including the government’s reluctance to provide details on the
cost of its legislation.

The government is “definitely preparing for an election,”
said Yaroslav Baran, the Conservative campaign’s director of
communications in the last two elections. “The prime minister
would rather not have an election than have an election, but the
threat is very real.”

At stake in a vote are tax reductions worth C$6 billion
($6.1 billion) annually for businesses such as Royal Bank of
Canada that the Liberals say are unaffordable and have pledged
to reverse if elected. The Liberals also have said they would
cancel the government’s plans to acquire 65 of Lockheed Martin
Corp.’s F-35 Joint Strike Fighter jets.

Recovery Accelerating

Recent data have shown Canada’s recovery is accelerating,
even as inflation remains tame. The economy added jobs for a
fifth straight month in February, and expanded at a 3.3 percent
annualized pace in the fourth quarter, the fastest in the G-7.
Government bonds have returned 4.8 percent over the past year
according to Bank of America Merrill Lynch index data, compared
with a 3.2 percent average for the G-7. Canada’s benchmark
S&P/TSX Composite Index has risen 13.6 percent over the past 12
months, compared with a 5.2 percent gain for the Dow Jones
Industrial Average.

Opposition lawmakers -- who hold a majority of seats in the
House of Commons -- have suggested they may try to bring the
government down with a so-called no confidence motion this week,
and the government could also fall if its fiscal plan -- to be
presented March 22 -- is voted down.

Polls show the opposition’s strategy may backfire. Aided by
a recovering economy and a barrage of campaign-style television
ads in recent months seeking to discredit Liberal Leader Michael
Ignatieff, Harper’s Conservatives are poised to improve their
standing in Parliament and may even win a majority of seats if
an election were held, said John Wright of polling company Ipsos
Reid in Toronto.

‘Death Wish’

“To trigger this would be a death wish for the Liberals,”
said Wright. “The economy and jobs continues to be the No. 1
issue and the prime minister and his party have all the
credibility on that issue.”

An Ipsos poll taken Feb. 23-27 for Global Television found
43 percent of Canadians would vote for the Conservatives,
compared with 27 percent for the Liberals. The telephone poll of
1,000 Canadians has a margin of error of 3.1 percentage points.

The most contentious issue related to Finance Minister Jim
Flaherty’s budget is his plan to maintain reductions in
corporate tax rates that would cost the government more than C$6
billion in revenue next year, according to estimates by the
Canadian Manufacturers and Exporters, an Ottawa-based lobby
group that supports the measures.

Canada cut the federal corporate income tax rate by 1.5
percentage points to 16.5 percent on Jan. 1, and it will fall to
15 percent in 2012 under legislation passed in 2007.

Japan Crisis

Harper has said the tax cuts are needed to sustain the
recovery and generate new employment, and warned a change in
government may undermine the country’s recovery. Harper said
last week the earthquake, tsunami and nuclear crisis in Japan
highlight the need for the country to strengthen the rebound.

“We cannot afford to take our focus off the economy and
get into a bunch of unnecessary political games, or as I said,
an opportunistic, an unnecessary election,” Harper told
reporters March 15 at a press conference in Surrey, British
Columbia.

Opposition lawmakers counter the government is misleading
Canadians on the costs of its initiatives, citing estimates by
the parliamentary budget officer Kevin Page that suggest costs
of the corporate tax cuts, the fighter jet purchase and new
crime legislation are understated. Page has said the purchase
and maintenance cost of the fighter jets may be about $12
billion more than the $17 billion the government estimated.

‘Contempt’ Vote

In addition to debating the fiscal plan, lawmakers this
week may vote on whether the government held Parliament in
“contempt” over its reluctance to detail the cost of its
legislation.

“All options are open,” Ignatieff, 63, said in an
interview with the CTV television network yesterday. “Election
next week, election next year, either way the issue will be,
‘can you trust Stephen Harper with power?’”

The Liberals are seeking to show the electorate what they
say is a pattern of government secrecy and undemocratic behavior
they hope will counter Harper’s advantage in the economy, aiming
to benefit politically from a series of incidents that have
embarrassed the Conservatives.

Two former government officials face investigations by the
Royal Canadian Mounted Police, including Bruce Carson, a former
aide to Harper who was alleged to have breached lobbying laws,
while four Conservative Party organizers are being charged by
the federal public prosecutor with violations of election
spending rules.

Two Ministers

As well, International Cooperation Minister Bev Oda has
faced hearings by an opposition-dominated committee over
allegations she misled lawmakers regarding cuts in funding to a
non-government organization. Opposition lawmakers have also
called for Immigration Minister Jason Kenney to resign after one
of his staffers sent a fundraising letter from his office,
violating Parliamentary rules.

“The Conservatives are going to have to answer for all of
those things,” said Steven MacKinnon, a former national
director for the Liberals and a candidate for the party in
Quebec, in a telephone interview. “This is a government that
promised to sweep in a new wave of accountability and have spent
every day in office making the government less accountable and
less relevant to Canadians.”

The parties have already begun campaign-like television
advertisements, with the Liberal ads claiming Harper “thinks
he’s above the law.” Conservative television ads have been
airing since January, painting Ignatieff, a novelist and former
professor at Harvard University in Cambridge, Massachusetts, as
an elitist with few links to Canada.

“Every winning campaign that I’ve ever seen has started
out with the ultimate winner being counted out in the
beginning,” MacKinnon said. “You will have a significantly
fluid electorate.”